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The KPMG report: Wider economic benefits on a ludicrous scale

We have the extraordinary KMPG report on theRegional Impacts of HS2, dated September 2013; principle authors, Lewis Atter and Richard Threlfall. The report claims the scheme will generate benefits worth £15bn annually. The whole was presented as evidence to the Transport Committee of the House of Commons – which took it hook line and sinker.

Well, the £15bn can only arise from generated business plus commuter trips, the supply side, since most of the benefits from existing trips obviously pre-exist. Forecast generated trips amounted to 76,900 per weekday, equivalent to 24 million per year. Data for Virgin West Coast from the National Rail Passenger Survey suggests 35% may be commuting or on business. Hence, if the £15bn is to be believed, each of these generated business-plus-commuter trips would be worth close to £1,800 or £3,600 for a round trip.

To appreciate how absurd that is first note that these are generated trips. Pre-existing ones would be more valuable (perhaps twice as valuable if the same principles are applied as are applied to time values). Secondly, multiply the £1,860 by all national rail’s commuter plus business trips. They number roughly 51% of Network Rail’s 1.7bn passenger rail journeys. The sum provides over £1,500 billion, a value which is similar to the nation’s entire GDP! Double it, because the sum refers to existing trips, and get a magnificent £3 trillion per year.

If only that were true. Building a railway would then equate to undreamed of riches.